Dot Hill Systems Reports Second Quarter Results

Dot Hill Systems Corp., a supplier of carrier-class data storage and storage area network (SAN) solutions, today announced second quarter financial results for the period ended June 30, 2001.

Net revenue for the second quarter 2001 was $14.9 million, compared to first quarter 2001 net revenue of $18.6 million and net revenue for the second quarter of 2000 of $33.4 million. For the second quarter 2001, Dot Hill experienced a net loss of $4.3 million, or $0.17 per share excluding a restructuring charge of $1.5 million relating primarily to unused and excess facilities, particularly in New York City, along with a continued reduction in workforce. Last quarter, Dot Hill reported a net loss of $7.8 million, or $0.32 per share excluding $18.9 million in one-time charges and a $2.0 million additional inventory reserve. For the second quarter of 2000, the company reported net income of $1.2 million, or $0.05 per share.

Gross margin for the second quarter of 2001 was 30 percent of revenue, compared to gross margin of 20 percent of revenue for the first quarter of 2001, excluding a $2.0 million additional inventory reserve. For the second quarter of 2000, gross margin was 36 percent of revenue. Dot Hill's cash and short-term investments were $19.6 million at the end of the second quarter.

Sales of Dot Hill's storage systems including SANnet(TM) accounted for 81 percent, tape backup sales accounted for 8 percent, and service accounted for 11 percent, respectively, of second quarter 2001 revenue. Sales to telecommunications, service provider and e-commerce customers accounted for 38 percent; sales to government customers accounted for 21 percent; and sales to commercial and other customers accounted for 41 percent of second quarter 2001 revenue.

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